Council will leave pipeline deal changes to SAWS

District 8 City Councilman Ron Nirenberg is another prominent voice who is taking part in the ‘Dare to Listen’ initiative started by Texas Public Radio here.

Photo: Edward A. Ornelas /San Antonio Express-News

The San Antonio Water System, not the City Council, will retain sole control over who will develop a massive water pipeline to eventually supply up to 20 percent of the city’s water.

The issue came up in a Wednesday meeting of the San Antonio City Council’s governance committee seven weeks after District 8 Councilman Nirenberg filed a formal request for council members to vote on a plan to shift control of the project to a new investor. Nirenberg, Mayor Ivy Taylor, District 3 Councilwoman Rebecca Viagran, District 9 Councilman Joe Krier and District 10 Councilman Mike Gallagher serve on the committee.

Nirenberg said he did not make a motion on his proposal Wednesday because he knew there would be no second.

Still, it prompted an exchange between Nirenberg and San Antonio Water System President and CEO Robert Puente. They discussed the plan by Abengoa Vista Ridge, the Spanish firm SAWS signed a water supply contract with in 2014, to sell 80 percent of its stake in the project to Garney Construction.

According to the contract’s terms, the pipeline is set to be built by 2020. Garney and its investors would recoup their investment via water payments for 30 years. SAWS would own the pipeline by 2050.

On Wednesday, Puente hinted to the committee that the project could change hands before then.

“Garney has let it be known from the very beginning that they are a construction company, they are not necessarily an equity type of firm,” he said. “And so they will be looking to sell this off as the owner and stick to the construction part. And so that may be happening, probably not anytime soon, but we may see that down the road.”

Puente did not specify to whom Garney might sell the project. He and SAWS board chairman Heriberto “Berto” Guerra Jr. have often referred to a provision that would allow SAWS to take over the project but have never said it intends to do so. Asked if another private-sector investor is lined up to buy out Garney’s share, SAWS vice president Gavino Ramos said no.

“We look forward to working with Garney once our SAWS board approves the agreement,” Ramos said in an email. “Garney has indicated verbally, as well as financially, they are in this project to do what they do best…build a pipeline.”

In November, weighed down by more than $10 billion in debt, Abengoa Vista Ridge’s parent company in Spain filed for preinsolvency protection from creditors. Earlier this week, while the parent staved off bankruptcy in Spain, it filed for Chapter 15 bankruptcy in the U.S. to hold off creditors while it restructures. In addition, 13 Abengoa subsidiaries filed for Chapter 11 bankruptcy in the U.S. None involved the Vista Ridge deal.

Nirenberg voted with fellow council members to approve the pipeline deal in 2014 and in November to raise water rates in part to pay for it. The pipeline is expected to deliver up to 16.3 billion gallons per year from Burleson County.

He said he feels encouraged by Garney, a company he said “seems to be on solid footing,” but pointed out the change compared to what he heard from SAWS and Abengoa six months ago.

“Maybe six weeks before the rate vote, we had Abengoa in our offices telling us the sky’s still blue, and here they are yesterday filing (for bankruptcy),” he said. “I want to be able to look our constituents in the eye and say we did our due diligence.”

Puente referred to the ordinance the council passed in 2014, which directed SAWS to handle any changes to the deal except those involving a change in the cost or amount of water delivered.

“It is a huge change that we’re going from a Spanish company by the name of Abengoa to a company that a lot of us haven’t heard about, especially if you’re not working at SAWS,” Puente said. “But it’s not a change that this resolution that y’all voted on said we have to come back to council on.”

The SAWS board must still approve Garney’s new ownership role. Puente said the board will get a full briefing from Garney at its meeting at 9 a.m. Tuesday and will likely vote in late April or early May.

SAWS will also hold a public meeting on the deal at 6:30 p.m. April 12 at its headquarters on Stadium Drive off of U.S. 281.

Brendan Gibbons covers the environment and water for the San Antonio Express-News. He joined the staff in October 2015 after two years of environmental reporting at The Times-Tribune in Scranton, Pennsylvania. A native of Grand Junction, Colorado, Brendan earned a degree in science journalism at the University of Missouri in 2013. He has worked as a copy editor for an English-language news site in Vietnam and as a staff writer for the online magazine Practical eCommerce. Other odd jobs included a stint as a science aide monitoring birds for the U.S. Forest Service and as an office assistant for a plant science lab in Missouri.